With the hearings presently going on at the U.S. Congress, financial authorities and mavens are proving that they were entirely unprepared for the financial tsunami that the United States and the world is now dealing with. Alan Greenspan admitted today before Congress that he had made a “mistake” in believing that banks would operate in their own self-interest to protect their shareholders and the equity in their institutions. This is “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.” He is in a state of shock and disbelief as he is witnessing the tattered financial world about him.

The world at-large has learned about the failures of manmade models of expertise. Models are only as good as the information that creates those models including the level of thinking that went into those models. Authorities are now reaping the embarassing truth about the overconfidence, graft and foolishness that went into much of the reasoning that brought about the global financial tsunami.

Foreclosures are on the mind of the nation as millions of Americans are at immediate risk of living on the streets, often due to no fault of their own. Even renters faithfully making timely rental payments are at risk. The FDIC put out several announcements on turmoil in the credit markets this morning and has repealed them all as the frantic pace of the situation grows.

Christopher Cox, chairman of the Securities and Exchange Commission, acknowledged to the House panel that “somewhere in this terrible mess, laws were broken.” The real tragedy is in the vagueness of the descriptions by Congress. The reality is that many more law were broken than are readily recognized, creating a legal tsunami of sorts as well. The ensuing turmoil and confusion in finding the guilty while saving the system has proved to be rather dramatic. The White House has chimed in with the prediction that national gross domestic product numbers will be poor followed by another quarter of bad news, confirming that a classical example of a recession is upon us without using the “r” word.

Economic security is the watchword of Americans as jobs are being eliminated while retirement funds and credit availability continues to contract. Some Americans have seen three-quarters of their retirement funds evaporate without a real hope of return, highlighting the real risk of investing in market products immediately before retirement. The worst fears of many Americans have come to impact the nation as the values of investment products continues to decline. Hard work, trust and wise investment has been eviscerated on the altar of corporate banking and financial profits.

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